Let’s Face It: Amazon Ate Best Buy’s Lunch

Best Buy (NYSE:BBY) CEO Brian Dunn just resigned. The removal of the tech retail outlet’s General signals Amazon’s (NASDAQ:AMZN) complete dominance and disruption of the sector.

In classic Darwinian fashion, Best Buy rested on the laurels of a once cutting-edge big-box business model. Corporate executives skimmed huge paychecks off the top, yet while they were distracted by enriching themselves the world continued to evolve. Clearly, Best Buy had the best opportunity to become the premier online destination for electronics. Unfortunately, management didn’t have the brainpower, guts, or incentives to focus on a future outside the brick-and-mortar units.

Not only did Best Buy give Amazon the keys to e-commerce success, Best Buy also stood idle while the purely digital Amazon knowingly turned Best Buy into showrooms for the same products offered at a cheaper price. This strategy alone could be one of Jeff Bezos’s most brilliant. On the flipside, Best Buy’s inability to lock up exclusive distribution to protect pricing will go down as one of the biggest blunders in retail history.

Best Buy is not alone. Blockbuster stood by and watched Netflix (NASDAQ:NFLX) drive them into bankruptcy. GameStop (NYSE:GME) is on its knees praying the future of video game purchasing will not become digital distribution directly from publisher to consumer. But in the end, all of these companies had every opportunity to build out or purchase the platforms that ultimately toppled them.

Can Best Buy’s model work if they phase out physical locations and aim to compete directly with Amazon online? Let us know what you think in the comments below.

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